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Firstcall Research is bullish on Aarti Drugs and has recommended buy rating on the stock with a target of Rs 175 in its April 4, 2013 research report.

“Aarti Drugs (ADL), incorporated in 1984, is engaged in the business of manufacturing generic bulk actives, advanced intermediates and specialty chemicals. The company is part of $265 million Aarti Group of Industries. ADL manufactures drugs in therapeutic segments such as anti-arthritis, anti-fungal, antibiotics, anti-diabetic, anti-cholinergic, sedatives, anti-depressant, anti-diarrhea and anti-inflammatory. The company’s manufacturing facilities are located at Tarapur and Sarigam. The drug major has received ISO 9001:2000 certifications for quality management. ADL's products are exported to over 85 countries across the globe. It has received Export House Status recognition of from Government of India. The company has clientele namely Sanofi-Aventis, Merck, Teva , Searle, Pfizer, Bayer and Clariant to name a few. The Company aims at becoming the first choice of this expanding market through better products, ensuring quality and timely delivery.”

“Aarti Drugs Limited engages in the manufacture and sale of bulk drugs and its intermediates in India and internationally, reported its financial results for the quarter ended 31st Dec, 2012. The third quarter witnesses a healthy increase in overall sales as well as profitability of company. The company’s net profit jumps to Rs.109.50 million against Rs.48.20 million in the corresponding quarter ending of previous year, an increase of 127.18%. Revenue for the quarter rose 28.40% to Rs.1991.40 million from Rs.1550.90 million, when compared with the prior year period. Reported earnings per share of the company stood at Rs.9.04 a share during the quarter, registering 127.18% increase over previous year period. Profit before interest, depreciation and tax stood at Rs.297.80 millions as against Rs.171.60 millions in the corresponding period of the previous year.”

“At the current market price of Rs 155, the stock P/E ratio is at 4.08 x FY13E and 2.93 x FY14E respectively. Earnings per share (EPS) of the company for the earnings for FY13E and FY14E are seen at Rs.37.98 and Rs.52.85 respectively. Net Sales and PAT of the company are expected to grow at a CAGR of 26% and 42% over 2011 to 2014E respectively. On the basis of EV/EBITDA, the stock trades at 3.80 x for FY13E and 3.10 x for FY14E. Price to Book Value of the stock is expected to be at 0.84 x and 0.66 x respectively for FY13E and FY14E. We expect that the company surplus scenario is likely to continue for the next three years, will keep its growth story in the coming quarters also. We recommend ‘BUY’ in this particular scrip with a target price of Rs 175 for medium to long term investment, says Firstcall Research report.

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